U.S., Common Market Set Import Accord On Steel Products

By James L. Rowe Jr.By James L. Rowe Jr.January 5, 1985

The Reagan administration and the European Common Market have reached an agreement in principle to restrict European exports of steel pipe and tubes to about 700,000 tons a year, and hope to have a detailed agreement within days, U.S. officials said yesterday.

The agreement, which will need the approval of the 10 countries that make up the European Community, is expected to put an end to one of the most contentious trade issues that has divided Europe and the United States in recent years.

In November, President Reagan slapped a ban on European Community pipe and tube exports to stem a flood of the products. The pipe and tubes were coming into the United States at a rate nearly three times higher than the level the two sides informally agreed upon in 1982.

Products that had been shipped when the ban took effect Nov. 29 were placed in warehouses here. European officials estimate that between 150,000 and 200,000 tons are in those warehouses.

Desiree Tucker, spokeswoman for the Office of the U.S. Trade Representative, said negotiators have yet to agree on what to do about the steel in the warehouses, how long the agreement should be in effect, what exceptions there should be to the limitations, and what would constitute a "short supply" of the product in the U.S. market.

If the products were determined to be in short supply, European shippers would be permitted to exceed the export levels in the agreement, which limits European Community exports to 7.6 percent of the U.S. market for steel pipe and tube. Tucker said the market is about 9 million tons today. In 1982, the European Community agreed to limit pipe and tube exports to 5.9 percent of the U.S. market.

European negotiators had hoped to persuade the Reagan administration to allow the steel in the warehouses to be sold in the United States without counting it against their 1985 shipments.

European officials said negotiators agreed to allow 66,000 tons of the warehouse steel to be counted as 1984 shipments, but the rest will have to be included in the 1985 ceiling, Washington Post special correspondent Steven J. Dryden reported from Brussels.

Tucker said she could not comment on any of the reports from Europe beyond confirming that the agreement in principle limits shipments to 7.6 percent of the U.S. market.

The steel export dispute not only has been an issue between the United States and the European Community, but also a source of internal dissension in Europe. Steel industries employ many workers, and members of the European Community want as much of the U.S. market as possible.

Apparently most of the steel already in U.S. warehouses came from Greece, Italy and France. Those three countries presumably will be able to manufacture less steel for U.S. export if the community applies the steel in the warehouses toward their share of the 1985 quota.

On Monday, the U.S. Treasury ordered that all pipe and tube shipments from Europe, including the steel in U.S. warehouses, must be certified or licensed by the European Community.

European negotiators had argued that the 5.9 percent level negotiated in 1982 was a guideline, not a rigid quota, and that EC exports had become more attractive to U.S. buyers because the strong dollar made them cheaper. When President Reagan imposed the quota in November, European shipments already had accounted for 14 percent of the U.S. market.

Reagan imposed the embargo after rejecting a tentative pact negotiated by U.S. Trade Representative William Brock and European Community Industry Minister Etienne Davignon. That accord set the same 7.6 percent level agreed to yesterday, but provided for a number of exceptions that would permit European suppliers to exceed the 7.6 percent level.

The new pact reportedly provides for only one exception. It also is expected to have a more rigid definition of what constitutes "short-supply" than the November agreement that Reagan rejected.

The agreement in principle was reached only three days before new members of the European Commission, the EC's executive body, are to take office, Dryden reported from Brussels. A U.S. negotiator there said the pact "removes a very difficult issue at the beginning of a new commission."